Sunday, October 14, 2012

An Iranian tragedy that can be avoided, options are still open for Iran to come out of economic chaos

Arak IR-40 Heavy Water Reactor, Iran
Disclaimer: This article is neither about, ‘equality and morality’ nor about the question, ‘if US can have a bomb why Iran can’t’? This is simply a cost benefit analysis, suspending all elements of highly punching nationalistic arguments and concentrating on simple questions.

What is the price tag of a nuclear bomb? If our answer is – it’s the cost for making it; then I must say we got it wrong. Let's take the case of Iran,

Cost for Iran

Cost of making a nuclear bomb is unacceptably high for Iranian economy. Billions of dollars are losing every year, because of sanctions over her sale of oil and gas. Obsession with nuclear bomb is diverting government’s attention from other pressing needs of economy and people. Sanctions related to transfer of technology in oil refining sector is forcing Iran to use more polluting oil. Talent and investment is heavily concentrating on nuclear sector, which otherwise could have been used for overall scientific and economic development of the country.

Rial - Iranian currency - is nose diving to new lows; in September alone it lost around 40% of its value. International shipping and logistical companies are reducing or totally eliminating port of calls. Iran is totally cut off from world's financial system and other networks. According to OPEC report, Iran’s production of 2.63mn barrels a day in September is its lowest since 1988. Automotive production is going to new lows (42% drop in last six months). Because of sanctions most foreign companies are either left or packing up creating shortages in foreign reserves. International insurance agencies are no longer re-insuring Oil and Gas ships carrying Iranian cargo.

Cost for others

Iran is an important country in Middle-East, not only because of its rich reserves of ‘oil and gas’ or strategic location but also due to its potential. Iran’s obsession with nuclear bomb and crippling western sanctions are reducing the off take of gas and oil output from her ports; which invariable keep the price high and volatile.

Iran shares a 936km long boundary with Afghanistan and offers sea connectivity as well. If there was a proper dialogue between P5+ 1, India, Pakistan, donor nations for Afghanistan and Iran then a better solution could have been possible for Afghan chess board. People in the region have to live in the perpetual fear of war. If Iran is going nuclear, then its arch-rival Saudi Arabia may also try to make one. In addition to that, Iran-Israel relations will make the things more complex. Countries which depend on Iranian oil - India, Korea, China, Sri Lanka etc will suffer.

Iran's benefit in going nuclear

I don’t think going nuclear will offer much deterrence for Iran. First of all, notwithstanding the heavy chest beating, neither ‘US’ nor Israel will go for a war over Iran without grave reasons. When world economy is passing through a fragile state, resources are so scarce nobody wants to upset it further.

Iran has to travel some way from doing a test explosion and making a bomb small enough to fit in a missile warhead (plus putting in place a proper detonating mechanism). Even if they did, it has to break the missile shield of Israel (US is still far away from the reach of Iranian missiles, except the fifth fleet in Bahrain). Iran will lose whatever sympathy it got, after the test explosion. Nuclear weapons will bring more sanctions which will definitely cripple Iranian economy which may probably lead to never ending street protests.


I think, it will be better for Iran and Western group to reach a deal which will be face saving for both. These are my suggestions,

1. Iran should stop the process of making weapon grade Uranium (however they should be allowed to continue using nuclear energy for civilian as well as medical purposes).
2. Allow IAEA to visit and certify its sites - Including the underground ones.
3. Iran can transfer, already manufactured weapon grade Uranium to a third country like Russia in exchange for an economic package.
4. Once this completed, Iran should be allowed to go ahead with their civil nuclear program. Probably a third country like Russia, France, South Korea or Japan can assist Iran in building nuclear complexes in Iran for producing electricity.
5. In proportion to the progress Iran shows in these areas, sanctions should be relaxed. Not only the ones imposed on it recently but the ones imposed on it for decades.
6. Inclusion of Iran in SWIFT, banking networks and other clearing houses.

Apart from this Iran and P5+ 1 countries should create a framework and a road map for further cooperation and development.

Iran needs to remember that, whether ‘West’ adds more unilateral sanctions or not, whether Israel and ‘US’ attacks or not, whether Russia and China veto another resolution in UN or not; Iran’s economy is on a free fall to an endless pit. Their first priority should be to come out of it.



1. New York Times
2. Iranian Students’ News Agency

Photo Courtesy: Wikipedia

1 comment:

  1. I believe India may have a greater role to play in this situation than it has assumed for itself. The strategic interests of India and Iran are convergent in Afghanistan. Neither of them would like to see the Taliban return to power. Iran is invested in the security of Shia Hazaras who were routinely massacred by the Taliban. This trend has accelerated in Pakistan as well with attacks on Shias and Sufi shrines. Iran is an ideal counterweight to the Wahhabi-Salafi ideology backed by Saudi Arabia and Qatar. India should make more efforts in bringing both the West and Iran to the dialogue table along with Israel. Otherwise it risks losing the initiative to China-Russia who have been actively defending Iranian and Syrian interests in international forums. Time for India to throw its weight around.